Zurik: Project management firm has poor track record in school construction

Zurik: Project management firm has poor track record in school construction
FEMA La. Recovery Office Director Mike Womack
FEMA La. Recovery Office Director Mike Womack

BELLE CHASSE, LA (WVUE) - Less than a month before HOV Services signed a lucrative contract with the Plaquemines Parish School Board, the New Orleans Recovery School District let the same company's $1 million construction management contract with HOV expire.

The RSD hired HOV to supervise a modular school construction project.

, "HOV failed to properly manage this complex construction.” The RSD decided not to “renew" the contract.

Still, weeks later, the Plaquemines Parish School Board hired that same company, HOV Services, to manage its complex construction projects for post-Katrina construction.

According to the Plaquemines Parish School Board, they received seven bids. The cheapest and highest scorer had "unfavorable references,“ so they threw out that bid - and awarded the contract to the second-ranked company, HOV Services.

When construction finally wraps up, HOV will make over $20.2 million, 14 percent of the total construction costs. In nearby St. Bernard Parish, their construction manager earned 2.5 percent of construction costs; in Jefferson Parish, 4.5 percent.

Contractor Pete Vicari is building a school in Belle Chasse; his work is being overseen by HOV.

“This is ridiculous,” he told us while discussing HOV's high hourly rates. “I wouldn't allow this. I mean, I can't justify it.”

Those rates that HOV has charged taxpayers include $185 an hour for a project manager, $180 for a scheduler, $180 for a documents control manager and $120 an hour for an administrative assistant. All the rates were approved by FEMA.

“We haven't had anything denied,” Plaquemines School Superintendent Denis Rousselle told us. “And look, we scrutinize it. We look at it, we turn it in, our FEMA and GOHSEP get back with us, and they approve it.”

But here's an interesting comparison. HOV signed its contract in Plaquemines Parish in May 2008. Another company, Jacobs, signed a similar contract with the Recovery School District just a few months earlier. That contract includes hourly billing rates for some personnel assigned additional services.

HOV bills $205 an hour for a director of operations. Jacobs' rate for an operations manager is just $161. HOV charges $185 dollars for a project engineer; Jacobs, $75. HOV charges $180 for a documents control manager; Jacobs, $56. And HOV bills $120 an hour for an administrative assistant. Jacobs has two rates, $67 and $49 an hour.

Job Title

HOV Hourly Rate

Jacobs Hourly Rate

Operations Manager

$205

$161

Project Engineer

$185

$75

Documents Control Mgr

$180

$56

Administrative Asst.

$120

$67/$49

HOV's hourly billings have included $5 million for reviewing, creating and storing files.

Why did this go from a fixed fee to an hourly rate?

"Because FEMA directed us to do that," Rousselle told us.

HOV Services initially signed a contract that would have capped its payment, would have based it on a fixed fee. Plaquemines Parish and HOV agreed to a deal that would pay HOV 9% of the total construction costs. But FEMA balked.

"FEMA may not have realized they would end up paying more, perhaps," said Plaquemines Schools Finance Director Ronald White said. "But they felt like by having it on an hourly basis that the construction managers, in this case HOV, would be more accountable for their time."

In the end, that move may cost taxpayers a significant amount of money.

"If you don't have the hourly rate, then you're not able to see what the skill set is that's performing certain tasks," said Mike Womack, FEMA's recovery director in Louisiana. "We often talk about the fact that you wouldn't want to be paying the lead for the project or the president of the company to make copies. You want to be able to see what each one of the different people assigned to the project, what work they were doing, what their hourly rate is."

A 9 percent cap on this contract would have been higher than what St. Bernard Parish paid, but still it would have reduced the payments to HOV - from over $20 million to under $13.59 million.

But FEMA insists the school district has gotten its money's worth. "Did they have the capacity to do this in-house? No," said Womack. "Did they have to rely a lot on this firm to do the work for them? Yes."

It will be at least another year yet before HOV's work is complete, and taxpayers stop paying a company rates that, in some cases, are more than attorneys make.

"Were they expensive? Definitely." Rousselle says. "Could I control that cost? No. Did FEMA approve the cost? Yes."

Copyright 2014 WVUE. All rights reserved.